According to the national data report and the data of consulting agency iiMedia Research, it is estimated that by the end of 2021, the scale of China's fitness industry will reach 5.9 billion U.S. dollars. This trend has been going on for more than 20 years. But now, due to the impact of COVID-19 and the increasing income of the wealthy, more and more Chinese who want a more active lifestyle are driving new growth.

The Chinese government also vigorously advocates sports as one of its strategic plans to improve health. In August of this year, the State Council of China issued the National Fitness Plan for 2021-2025, which set a goal of increasing the proportion of people who exercise regularly from 37.2% to 38.5%. In turn, this growth will drive the size of the sports industry to $782.0 billion by 2025.

Therefore, long before the COVID-19 outbreak, China's sports and leisure market had begun to grow steadily. However, during the lockdown, demand soared, especially in new first-tier cities such as Chengdu, Chongqing, and Hangzhou. According to the market research company Qianzhan.com, the sportswear market size of the entire apparel industry in China has grown from 8.8% in 2016 to 13.3% in 2020.

Now, after a few years of expansion to major cities in China, it is time for sports and leisure brands to target lower-tier cities. Here, the Beijing News explained why.

Saturation of sports and leisure markets in big cities

Lululemon is one of the world's leading sports and leisure brands. It entered the Chinese mainland market in 2016 and has offices in Shanghai and Beijing. The total number of Lululemon stores in China has now reached 59, and more than half of the stores are located in first-tier cities. However, in recent months, it has begun to expand into lower-tier cities, opening new stores in Lanzhou, Sanya and Nanning, and gradually shifting its focus from first-tier cities.

Although traditional global sportswear brands such as Nike and Adidas are still maintaining their momentum, the sports and leisure market in first-tier cities has become saturated, especially with the addition of local brands. Local fashion brands such as Maia Active, Sylphlike Loli and Particle Fever have also successfully captured the hearts of young people in the country through vibrant activities.

In particular, Maia Active has expanded its footprint to 10 stores, of which 8 are located in first-tier cities. Earlier this fall, it also launched a series of fresh and avant-garde designs in collaboration with Shanghai's independent women's clothing brand YINGPEI STUDIO, which debuted on the runway of Shanghai Fashion Week.

Maia Active cooperates with YINGPEI STUDIO to continue to provide women with better quality sportswear. Photo: Maia Active

These brands are also more adapted to the social media needs of these new shoppers. As active lifestyles become the new cool, and due to increased health awareness, posting photos in sports bras and yoga pants is an emerging Internet trend.

From Tier-1 to Tier-2 opportunities

China's lower-tier cities are increasingly replacing first-tier cities as the core source of growth for the fitness industry. With the soaring income level in China, fitness habits have expanded from first-tier cities to second-tier cities and below-the fitness market in these areas has shown amazing growth.

In addition, Deloitte’s 2010 report on Chinese consumers confirmed this, and pointed out that “how low-level retail consumers obtain signals from consumers’ buying signals in first-tier cities. This behavior seems to support what is described as “seeing first-tier cities”. To the entry strategy of making money in second, third, and fourth-tier cities, more and more retailers and brands in China are following this strategy."

Alison Malmsten, marketing director of strategy consulting company Daxue Consulting, said that the disposable income of rural and lower-tier urban residents is growing faster than that of urban residents. “As a result, the purchasing power of consumers in lower-tier cities is increasing dramatically,” she added, “if not, sportswear brands should focus on understanding consumer needs in lower-tier cities.”

Key fitness trends to tap

According to Daxue Consulting's report on China's health market, as an important part of this fitness trend, sports and recreation such as yoga and boxing are becoming more and more popular and will soon penetrate into lower-tier cities. Especially yoga, as the main source of inspiration for sports and leisure clothing, is expected to flourish. The "China Yoga Industry Research Report" released by the market research company iResearch pointed out that second- and third-tier cities will become mature markets for yoga.

On the other hand, since 2020, “connected” fitness has played a transformative role in the home gym industry. As smart gym players such as Keep app, smart mirror Mirror and FITURE are already in the first-tier cities (and technology giants like Baidu and Huawei are looking at this space), it is only a matter of time before interactive fitness becomes a popular trend in lower-tier cities.

The Chinese smart fitness company, Fisher, has developed a mirror-like exercise screen that provides various exercise courses from yoga to strength training. Photo:Fiture

In addition, Nick Herbert, BD manager of CSPE Consulting, a strategic consulting company focused on sports performance equipment, told the Beijing News that consumers in these regions are now more interested in personal devices that accompany these trends. "Since COVID-19, in addition to the continued growth before the pandemic, we have also seen direct sales of fitness cardio equipment (including rowing machines for individual customers) have increased by 30%, a significant increase," he said. "But on the other hand, small cities have always been the main driver of personal training studio sales."

Although sports and leisure brands have been booming in Beijing, Shanghai, Shenzhen and Guangzhou, the market seems to have opened up again, this time in second and third-tier cities.

Sports and leisure, China's second-tier cities, China's third-tier cities, fitness, fitness, lululemon, Maia Active, yoga

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